Citigroup to Pay $75 Million to Settle Lawsuit filed by SEC

Posted by on Jul 29, 2010 | No comment

Citigroup Inc. (NYSE: C)  has agreed to settle a lawsuit filed by the Securities and Exchange Commission (SEC) by paying $75 million. The lawsuit relates to the bank’s failure to disclose $40 billion in subprime exposure to investors.

As part of the settlement with the SEC, Gary Crittenden, former CFO of Citi, has agreed to pay $100,000. Arthur Tildesley, Citi’s former head of investor relations, has agreed to pay $80,000.

In its complaint, the SEC said that Citi had said in its earnings calls and public filings between July and October 2007 that its exposure to subprime mortgages totaled $13 billion. However, the SEC said that Citi’s actual exposure was much higher as the bank had omitted two categories of subprime securities, which totaled $40 billion in additional exposure.

It may be recalled that Citi had to be bailed out by the U.S. government under the TARP. Much of the bank’s problems stemmed from its exposure to subprime mortgages.

Shares of Citi are up in today’s trading. The stock reached a high of $4.15 in mid-day trading. At last check, it was up 0.86% to $4.12, with volume at 310.92 million in mid-day trading.

Citi reported its second-quarter financial results on July 16. The bank reported second-quarter net income of $2.7 billion, or $0.009 per diluted share. It reported second-quarter revenue of $22.1 billion. In the first six months of 2010, Citi has earned net income of $7.1 billion. The bank reported a decline of $2 billion sequentially to $6.7 billion in its provisions for credit losses and for benefits and claims. This is lowest since the third quarter of 2007. At the end of the second quarter, the bank’s asset stood at $1.9 trillion, down 3% on a sequential basis. The bank’s net interest margin was 3.15% in the second quarter of 2010.

Since reporting the second-quarter financial results, the Citi stock has appreciated more than 5%. Year-to-date, the stock has climbed 24.62%. The stock has a 52-week range of $2.95-$5.43. It is currently trading above its 10, 20, 50, and 100 day moving averages, which is a bullish signal. The Citi stock is facing strong resistance at $4.20. It has strong support at $3.96.

Analysts, currently, have a consensus rating of Outperform on Citi. The stock has 7 Buy, 3 Outperform, 6 Hold, 1 Underperform and 1 Sell rating, at the moment.

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About BeaconEquity.com

BeaconEquity.com is committed to producing the highest-quality insight and analysis of small-cap stocks, emerging technology stocks, hot penny stocks and helping investors make informed decisions. Our focus is primarily OTC stocks in the stock market today, which have traditionally been shunned by Wall Street. We have particular expertise with renewable energy stocks, biotech stocks, oil stocks, green energy stocks and internet stocks. There are many hot penny stock opportunities present in the OTC market everyday and we seek to exploit these hot stock gains for our members before the average daytrader is aware of them.

Beacon Equity Group Disclaimer

This newsletter is a paid advertisement and is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this report or email is not provided to any individual with a view toward their individual circumstances. Beaconequity.com is a wholly-owned subsidiary of BlueWave Advisors.

While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in our newsletter is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between the any predictions and actual results. Always consult a real licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.

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